Hey, Big Spenders

It's a blistering 115 on a summer Sunday in New Delhi, and it feels as if your head is stuck in a tandoor. But Saurabh Kedia, 22, would never know it. The New Delhi native dips his flat naan bread into a dish of spinach curry in the air-conditioned comfort of a friend's private club. On the table lies Kedia's prized possession, an Ericsson feature-loaded mobile phone with PDA-like functions that cost him nearly $400, almost as much as an average Indian earns in a year. That night he plans to watch X2: X-Men United at a posh, newly built multiplex theater south of New Delhi and then sip cappuccinos with friends at one of the city's hip new coffee shops, a twice-weekly indulgence for Kedia. With his job as a computer-call-center manager, he is earning enough to consider buying a car and even his own apartment. "We are able to make more and much easier money," says Kedia, beaming. "Every year in India, things are looking up."

Kedia is a new breed of consumer in Indiayoung, increasingly wealthy and willing to spend on everything from mobile phones to sneakers to French fries. In the not-too-distant past, such goodies were off limits to all but a fortunate lite in India, but a rapidly changing economy is making the higher life available to more and more of the country's billion-strong population. College graduates are landing well-paying jobs in a host of emerging industries that barely existed in India three years ago: retail chains, fast-food restaurants, mobile-phone companies and especially call centers, data-processing firms and other businesses that do "back office" work for U.S. companies. KSA Technopak, a management-consulting firm in New Delhi, estimates that these young adults command $10.5 billion in cash to burn. The spending of these college grads is rising about 12% a yearmore than twice the pace of the economy's growth.

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The youngsters are part of a middle-class boom in India. The National Council of Applied Economic Research estimates that the number of people living in households that earn at least $1,800 annuallyconsidered the minimum for middle-income familieshas increased 17% in just the past three years, to more than 700 million. At this income level, Indian families can purchase motorbikes, televisions and refrigerators. The organization expects the number to rise an additional 24% by 2007. "Income is growing like anything," says R.K. Shukla, a statistician at the National Council. "The future is very rosy in India."

In this way India is mimickingand still trailingAsia's other Goliath: China. Beijing's cadres embraced market reform much earlier than their Indian counterparts didback in the late 1970sand have been much more devoted to liberalization. As a result, China's per-capita income, now about $900, has been growing at least twice as fast as India's for the past 20 years. With incomes rising in China, foreign investors found a more sizable market for their wares there than in India. For example, China has 230 million mobile-phone users, India a measly 18 million.

Yet such companies as Citibank, McDonald's and Motorola are hustling to tap India's burgeoning number of young big spenders. Brands like Reebok and Nokia are making deeper inroads than ever before. Modern malls and fast-food restaurants are proliferating among the crumbling British colonial buildings and ancient monuments that dot India's cities. "These guys are a huge consumer audience," says Raman Roy, managing director of Wipro Spectramind, one of India's largest call-center operators. "There is a fundamental economic change happening."

The cutting edge of this consumer boom is on full display in Gurgaon, a satellite city south of New Delhi that is rapidly developing into mall-rat heaven. Since December, three mammoth, glitzy malls have opened their doors there, crammed with a collection of stores airlifted straight from America's suburbsNike, Benetton, Pizza Hut, Subway sandwiches, even a showroom for Bose audio systems. Two multiplex theaters show such Hollywood hits as The Matrix Reloaded. Five more malls nearby are in the works.

Gurgaon has become the official stomping ground of Swati Jain and Yamini Kandari, both 22, roommates and co-workers at a nearby call center, where they field phone traffic for a U.S. computer maker. Every weekend they stroll the malls shopping for Levi's jeans, watch movies and make the obligatory stop at McDonald's. Though they both have big dreams (Kandari wants a Ferrari; Jain prefers a Mercedes), they spend half their annual salariesabout $2,000on shopping, eating out and other living expenses. "I'm living life for the day," says Kandari.